Direct tax mop-up likely to miss Rs 5.8 lakh crore target
March, 16th 2012
The government may fall short of the revised target for direct tax collection of Rs 5.8 lakh crore for 2011-12 fiscal by at least Rs 50,000 crore going by the latest data on advance tax payments, according to senior income tax officials.
Most of the top corporates have paid marginally higher advance tax for the quarter ending March this year which will mean that the revenue department will only be able to raise Rs 5.32 lakh crore or a little over that-which was the original target. The finance ministry had revised the tax collection targets last year in a desperate bid to boost revenue and to keep the fiscal deficit at below 5% of the Gross Domestic Product (GDP).
The government has targeted a fiscal deficit of 4.6 % of the GDP in FY 12 but with a shortfall in both direct tax collection, which includes corporate and personal income tax besides proceeds from shares divestment of state owned companies, the fiscal deficit could be higher by several percentage points, according to economists.
If the revenue department ends up with a collection of Rs 5.32 lakh crore, it will signal a growth of 20% over the year-ago period. Officials said that their reports suggest that Mumbai, which account for 35-40 % of the all India direct tax collection, will not be able to meet even the original target of Rs 2.04 lakh crore. This is despite the special drive launched by the Central Board of Direct Taxes (CBD), the apex body for direct tax administration in the country, to motivate its officers to maximise revenue collection.
The CBDT had issued warning to its chief commissioners that their transfers and promotions would be linked to the tax collections in their respective jurisdiction. "In the end, tax collection is closely linked to the performance of the economy" a senior official said.
Although the government had projected a growth of 9% at the start of this fiscal, it has now admitted that growth would be quite lower with indications that it could be close to 7%.
Most companies have reported marginal increase in profits in the last quarter of advance tax payments. However, foreign banks were an exception, reporting a substantially higher profit than last year. The three state-owned oil companies did not report any profits this quarter.
India's top lender-State Bank of India, reported an increase of Rs 150 crore to Rs 1,650 crore. The tax outgo of India's top private firm, Reliance Industries, was Rs 1,130 crore against Rs 1,054 crore. The company figures in the list of the top five tax paying companies in India. Tata Consultancy Services or TCS paid Rs 550 crore for the quarter, up by Rs 300 crore. Citibank' paid Rs 500 crore, Rs 50 crore more than the year-ago period.
HSBC's tax outgo was the same as last quarter at Rs 450 crore. However Deustche Bank's paid higher advance tax- up by Rs 130 crore to Rs 300 crore. Standard Chartered Bank paid Rs 420 crore against Rs 200 crore last year.
Life Insurance Corporation (LIC) tax payment came down by Rs 230 crore to Rs 970 crore this quarter. General Insurance Corporation reported nil tax against Rs 7 crore paid in the last quarter of 2011-12 fiscal. HUL, leading FMCG major, too reported a higher tax outgo than last year paying a higher advance tax of Rs 50 crore at Rs 200 crore.